Comments on: How to Get out of Debt: Step 2 – Debt Payoff Strategy http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/ Personal Finance Blog for Young Professionals Thu, 09 Feb 2012 00:08:54 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Ellen http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-10455 Ellen Thu, 22 Apr 2010 04:36:10 +0000 http://20somethingfinance.com/?p=122#comment-10455 Thanks for the information of Debt Consolidation Payment Method. People want to be careful with the idea of Debt consolidation loans. It is very helpful for the people if they list there debts and try to manage in proper way. Debt Consolidation is danger if people don't know the correct procedure how to manage money. If people know the proper procedure regarding managing money Debt Consolidation loan is very helpful. Thanks for the information of Debt Consolidation Payment Method. People want to be careful with the idea of Debt consolidation loans. It is very helpful for the people if they list there debts and try to manage in proper way. Debt Consolidation is danger if people don’t know the correct procedure how to manage money. If people know the proper procedure regarding managing money Debt Consolidation loan is very helpful.

]]> By: Liz http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-10095 Liz Wed, 31 Mar 2010 02:05:49 +0000 http://20somethingfinance.com/?p=122#comment-10095 You forgot to add something about the snowball method (which makes it a good alternative to the higher interest method) which is that as you pay off the smaller debts, that payment adds on to the next debt's payment. To use the example that was given in the article, once the smallest debt (car loan @ $4k) is paid off with $500/mo., that $500 is ADDED ON to the first credit card payment, meaning that you'll start to pay $550 on the credit card, instead of just $450 (the min + the extra $400 in your monthly budget.) After that's paid off, the $550 is added on to the $75 payment on the second credit card, making that monthly payment $625. Your monthly budget will always stay the same with $1600 being allocated towards debt repayment, but it's being applied to fewer and fewer debts as they're paid off. The snowball method is literal in that the payments are getting added onto one another, and figurative in that the psychological boost of paying off smaller debts gets you motivated to keep going. You forgot to add something about the snowball method (which makes it a good alternative to the higher interest method) which is that as you pay off the smaller debts, that payment adds on to the next debt’s payment. To use the example that was given in the article, once the smallest debt (car loan @ $4k) is paid off with $500/mo., that $500 is ADDED ON to the first credit card payment, meaning that you’ll start to pay $550 on the credit card, instead of just $450 (the min + the extra $400 in your monthly budget.) After that’s paid off, the $550 is added on to the $75 payment on the second credit card, making that monthly payment $625. Your monthly budget will always stay the same with $1600 being allocated towards debt repayment, but it’s being applied to fewer and fewer debts as they’re paid off. The snowball method is literal in that the payments are getting added onto one another, and figurative in that the psychological boost of paying off smaller debts gets you motivated to keep going.

]]> By: James http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-5543 James Sat, 21 Nov 2009 10:51:23 +0000 http://20somethingfinance.com/?p=122#comment-5543 Just learn how to manage your own finances and pay off debts without spending more money on another company who is supposed to do what people need to do for themselves. Just learn how to manage your own finances and pay off debts without spending more money on another company who is supposed to do what people need to do for themselves.

]]> By: Thomas http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-4459 Thomas Mon, 31 Aug 2009 04:54:03 +0000 http://20somethingfinance.com/?p=122#comment-4459 You want to get out of debt is noble, but you must do something to get there ... wanted to write and will not serve. In part-time job is a great idea ... Get your resume and network with people. But a part-time employment, again without action, it will not. You must set realistic goals and plan of approach. If your debts credit card, stop using it immediately. If you can not pay cash for something you really can not afford. You already know how interest works against you. Make a list of all your debts and expenses. You may need to give things or at least reduce. Put extra money on your debt and watch the debt reduction in a row. Because debt is the result of the decision, if all the decisions you have made the debt that you are wrong. It is time to regroup and focus. Your answer is not a thing but a combination of increased revenues and reduce costs. You want to get out of debt is noble, but you must do something to get there … wanted to write and will not serve. In part-time job is a great idea … Get your resume and network with people. But a part-time employment, again without action, it will not. You must set realistic goals and plan of approach. If your debts credit card, stop using it immediately. If you can not pay cash for something you really can not afford. You already know how interest works against you. Make a list of all your debts and expenses. You may need to give things or at least reduce. Put extra money on your debt and watch the debt reduction in a row. Because debt is the result of the decision, if all the decisions you have made the debt that you are wrong. It is time to regroup and focus. Your answer is not a thing but a combination of increased revenues and reduce costs.

]]> By: Jason http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-3447 Jason Mon, 13 Apr 2009 18:28:15 +0000 http://20somethingfinance.com/?p=122#comment-3447 Strategy 2 is the psychological strategy. Those who are more logical thinkers (majored in engineering, economics, etc.) will probably prefer Strategy 1 because it appeals to their way of thinking. Those who like to make to-do lists and derive satisfaction from checking items off as they are done, and probably those who think more abstractly (majored in philosophy, English, etc.) will find Strategy 2 more effective. These are probably the same kinds of people who tend to get themselves into debt to begin with because discipline logical types of people would naturally tend to make a budget and stick to it (of course, I'm generalizing... this is just food for thought). I put myself in the latter category, so I'd follow Strategy 2. However, another good reason to consider this one is if you pay off a credit card to $0, that one is now available to you for a balance transfer, should it be offered. Then you can use it to pay down your highest interest debt. Even if you don't get a transfer offer, paying off one debt ASAP gives you a little more leverage in negotiating with those other folks. Strategy 2 is the psychological strategy. Those who are more logical thinkers (majored in engineering, economics, etc.) will probably prefer Strategy 1 because it appeals to their way of thinking. Those who like to make to-do lists and derive satisfaction from checking items off as they are done, and probably those who think more abstractly (majored in philosophy, English, etc.) will find Strategy 2 more effective. These are probably the same kinds of people who tend to get themselves into debt to begin with because discipline logical types of people would naturally tend to make a budget and stick to it (of course, I’m generalizing… this is just food for thought).

I put myself in the latter category, so I’d follow Strategy 2. However, another good reason to consider this one is if you pay off a credit card to $0, that one is now available to you for a balance transfer, should it be offered. Then you can use it to pay down your highest interest debt. Even if you don’t get a transfer offer, paying off one debt ASAP gives you a little more leverage in negotiating with those other folks.

]]> By: Nick http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-3203 Nick Mon, 16 Mar 2009 02:34:32 +0000 http://20somethingfinance.com/?p=122#comment-3203 Could someone explain me how Strategy 2 (snowball) can be better than Startegy 1 (highest interest first)? Using snowball method you'll always pay more in interests and stay longer in debt! Could someone explain me how Strategy 2 (snowball) can be better than Startegy 1 (highest interest first)? Using snowball method you’ll always pay more in interests and stay longer in debt!

]]> By: Matt http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-3086 Matt Tue, 03 Mar 2009 00:52:51 +0000 http://20somethingfinance.com/?p=122#comment-3086 Great article here. About a year ago I started listening to Dave Ramsey after talking to a friend who had employed the snowball technique. I got very motivated and got my snowball rolling. After about 7 months I had paid down $8000 in debt. I then spoke to another friend who used the highest-interest method and saw the value in it. BIG POINT Exactly as is stated above if I had started with the highest-interest method first I don't think I would be successful with my debt payoff currently. I was able to knock out those smaller amounts quickly and it gave myself the wins I needed to stay focused. It's amazing to see the progress. Now that I have a base model and have changed my spending habits I am going to save a lot more money paying off the high-interest amounts first. As an update, in just 14 months I have paid down nearly $17,000 in debt. I still have a ways to go, but I know I will get their by using a combination of the two methods described. Now I preach both to everyone I know! Great article here.

About a year ago I started listening to Dave Ramsey after talking to a friend who had employed the snowball technique.

I got very motivated and got my snowball rolling. After about 7 months I had paid down $8000 in debt. I then spoke to another friend who used the highest-interest method and saw the value in it.

BIG POINT
Exactly as is stated above if I had started with the highest-interest method first I don’t think I would be successful with my debt payoff currently. I was able to knock out those smaller amounts quickly and it gave myself the wins I needed to stay focused. It’s amazing to see the progress.

Now that I have a base model and have changed my spending habits I am going to save a lot more money paying off the high-interest amounts first.

As an update, in just 14 months I have paid down nearly $17,000 in debt. I still have a ways to go, but I know I will get their by using a combination of the two methods described.

Now I preach both to everyone I know!

]]> By: Monica - current account http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-2615 Monica - current account Fri, 23 Jan 2009 11:18:50 +0000 http://20somethingfinance.com/?p=122#comment-2615 there have always been three ways of clearing debt: 1. repay it 2. inflate it away, or let the Government do it for you 3. default I once read as book on international debt which stated "1" was by far the most common. Russians and various African and American countries/states apparently used to be masters at this. Too much debt, time for a revolution. Inflation used to be great but no more. Default is now much easier with IVAs readily available on every high street and bankruptcy much less painful. With an IVA you can still stay in business and I know qualified accountants and solicitors who have gone this route and kept their practices running!! But it does not help your credit history. But it you decide to repay then you only have two choices - earn more or spend less. But it can make a lot of difference how you apply these policies and you may find it useful to visit this web site - it is a US site but I found it quite useful. there have always been three ways of clearing debt:

1. repay it
2. inflate it away, or let the Government do it for you
3. default

I once read as book on international debt which stated “1″ was by far the most common. Russians and various African and American countries/states apparently used to be masters at this. Too much debt, time for a revolution.

Inflation used to be great but no more.

Default is now much easier with IVAs readily available on every high street and bankruptcy much less painful. With an IVA you can still stay in business and I know qualified accountants and solicitors who have gone this route and kept their practices running!! But it does not help your credit history.

But it you decide to repay then you only have two choices – earn more or spend less. But it can make a lot of difference how you apply these policies and you may find it useful to visit this web site – it is a US site but I found it quite useful.

]]> By: Jenette Mitchell http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-432 Jenette Mitchell Sat, 26 Jul 2008 20:15:18 +0000 http://20somethingfinance.com/?p=122#comment-432 There are many ways that people can steal our identity. One, many people don't own a shredder. Use it. And second, be carefull about who and where you place your information. There are many ways that people can steal our identity. One, many people don’t own a shredder. Use it. And second, be carefull about who and where you place your information.

]]> By: Chris http://20somethingfinance.com/how-to-get-out-of-debt-step-2-debt-payoff-strategy/comment-page-1/#comment-431 Chris Fri, 25 Jul 2008 21:50:45 +0000 http://20somethingfinance.com/?p=122#comment-431 I am playing around with a snowball spreadsheet that I found online. I wrote an entry in my blog about it with a couple of screenshots at http://www.mydebtjourney.com Is the spreadsheet you used available to download? I am challenged with a couple limitations on mine. 1. I am trying to pay down $75,000 in credit card debt. Some of that is sitting at 0% right now. When the 0% promotion is up, the minimum payment will obviously change. It is difficult to account for this in a snowball calculator. 2. My minimum monthly payments go down each month as I pay off the balance. Most snowball calculators that I saw are based on fixed monthly payments. My Bank of America card has a minimum monthly payment of 1% of the balance plus finance charges. The finance charges are compounded daily. It gives me a headache to try and figure out my future monthly payments. 3. I love to do balance transfers when I can to save on interest each month. For example, my Chase card is currently 0% with a balance of $11,875. When my promotional period expires, my interest rate will skyrocket to 20.99%. Before this happens, I plan on moving the balance to another card with lower interest. Up until now, I never really had a plan. I just learned about snowballing debt. I'm just not sure how I should approach it. It would be easy if all of my debt was at a low rate. I am playing around with a snowball spreadsheet that I found online. I wrote an entry in my blog about it with a couple of screenshots at http://www.mydebtjourney.com

Is the spreadsheet you used available to download?

I am challenged with a couple limitations on mine.

1. I am trying to pay down $75,000 in credit card debt. Some of that is sitting at 0% right now. When the 0% promotion is up, the minimum payment will obviously change. It is difficult to account for this in a snowball calculator.

2. My minimum monthly payments go down each month as I pay off the balance. Most snowball calculators that I saw are based on fixed monthly payments. My Bank of America card has a minimum monthly payment of 1% of the balance plus finance charges. The finance charges are compounded daily. It gives me a headache to try and figure out my future monthly payments.

3. I love to do balance transfers when I can to save on interest each month. For example, my Chase card is currently 0% with a balance of $11,875. When my promotional period expires, my interest rate will skyrocket to 20.99%. Before this happens, I plan on moving the balance to another card with lower interest.

Up until now, I never really had a plan. I just learned about snowballing debt. I’m just not sure how I should approach it. It would be easy if all of my debt was at a low rate.

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